Economists changed their minds about how immigration might be helping the U.S. economy after the Congressional Budget Office reported higher population growth than the Census Bureau. A new report from Wall Street says that even the CBO report is wrong about how big the immigration wave is.
The CBO said that net immigration was 3.3 million last year, but Barclays, in a new report on immigration that was part of the bank’s half-year outlook, said that it was 4 million. This was more than any other U.S. government agency.
According to the Barclays report, which is based on a new tracker it made by combining data from 14 official sources, the CBO didn’t take into account the record rise seen in December alone.
Since then, immigration has slowed down, but Barclays estimates that it is still much higher than it was in the past.
The Barclays report says that a lot of people coming to the U.S. for “humanitarian” reasons, mostly to look for asylum, is driving up immigration. If these asylum seekers from a changing group of Central and South American countries stay in the U.S. for at least 180 days, they can get a work permit.
The Barclays team, led by Marc Giannoni, says that the wave of immigration has helped the economy and lowered inflation.
The strong macro outlook is likely due in large part to the large increase in immigration that happened after the pandemic. This helped ease the tight labor supply that existed after the pandemic and also directly boosted aggregate demand, say the authors.
“We think that labor shortages would have been a bigger headwind if this factor hadn’t been present.” This could have made wage and price pressures worse, which is why monetary policy had to be tightened.
They say that the 4 million more immigrants who came to the U.S. last year increased the labor force by 2.5 million people and were responsible for about three-quarters of the rise in private payroll jobs over the past year.
About a third of the growth in output came from the hours worked by immigrants, which made up for the drop in hours worked by native-born workers.
Before the election, the Biden administration tried to stop people from coming to the U.S. They think that if the government sticks to the policies from the first Trump administration, payroll gains will be cut by about 125,000 per month next year. If the government doesn’t change its recent executive action, payroll gains will be cut by about 65,000 per month next year.
The new Biden rules started on June 4, but they won’t show up in the labor data yet because people who come to the U.S. as humanitarian immigrants have to wait six months before they can get work authorization, they say.
The Labor Department said that nonfarm payrolls went up by 272,000 in May and have been going up by an average of 232,000 per month for the last twelve months.
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